(Yicai) April 11 -- Shares of Country Garden Holdings rose after the Chinese real estate developer said it had secured the support of a major bondholder group for its offshore debt restructuring plan, describing the agreement as “significant progress.”

Country Garden [HKG: 2007] closed up 2.3 percent at 44 Hong Kong cents (6 US cents) a share in Hong Kong, after surging by as much as 7 percent earlier today. The benchmark Hang Seng Index added 1.1 percent.

Country Garden has reached an initial agreement with a group of bondholders that owns almost 30 percent of the firm’s outstanding offshore debt, the Foshan-based builder announced today. It called on other creditors to also support the restructuring deal.

The proposed overhaul would write off about USD14.1 billion of Country Garden’s outstanding foreign debt, along with all accrued and unpaid interest. It offers creditors various options, including conversion into cash, zero-coupon and low-interest mandatory convertible bonds, and debt-to-equity swap on maturity of those bonds, and long-term low-interest bonds.

Country’s Garden expects the restructuring to reduce its liabilities by as much as USD11 billion and lower its weighted average financing costs to 1 percent, 2 percent, or 2.5 percent from about 5.8 percent. The firm aims to complete the restructuring by the end of the year.

The company also set out a new management incentive plan, under which 5 percent of its fully diluted ordinary shares may be awarded to the management team to encourage them to execute the company’s business plan successfully.

Once China's largest real estate developer with sales of CNY441.1 billion (USD60.3 billion) in 2022, Country Garden defaulted in October 2023 following an overly aggressive expansion and industry-wide downturn.

The company recorded its first annual loss of CNY6.1 billion (USD826 million) in 2022, which grew to CNY178.4 billion the year after. However, it managed to shrink the loss by 82 percent to CNY32.8 billion (USD4.5 billion) last year.

Country Garden had total debt of about CNY253.5 billion as of Dec. 31, with CNY226.8 billion of that being short-term liabilities, according to its annual earnings report released on March 28. Total cash reached CNY29.9 billion, including restricted cash of CNY23.5 billion.

While its total assets exceeded CNY1.03 trillion (USD142.8 billion), total liabilities were about CNY984.6 billion, leaving net assets of around CNY51.3 billion.

Editor: Futura Costaglione